Understanding the nuances of business miles reimbursement
Employees who travel in the performance of their duties are able to claim their business miles through expenses. Often business miles are travelled in an employer-provided vehicle, whether that be a company car or company van. It is possible that an employee may use their private vehicle for work purposes too. In practice, a business journey would look like this:
- Travel between a permanent workplace and a temporary workplace, such as to a meeting or training course
- Travelling between temporary workplaces, such as site inspections
- Travel between two workplaces owned by the same employer
- If home is your permanent workplace, travel to another workplace due to the requirements of the job
An important point to remember here is that travel to a permanent workplace, and vice versa, is a commuting journey and will always be considered private mileage.
Privately Owned Cars
HMRC has mileage rates in place called the “Approved Mileage Allowance Payments” or AMAPs. HMRC-approved mileage rates should be used for the reimbursement of business journeys in an employees’ own car. The current rate is 45ppm up to 10,000 business miles and 25p over 10,000 miles. These figures are designed to cover insurance, wear and tear and fuel. The fuel type (petrol, diesel, hybrid, electric) has no bearing on the rates – they are the same for all fuel types.
If your employer provides a fuel card, or reimburses for fuel, for non-business journeys you will be liable for the Fuel Scale Charge. Where a company car/van does not have fuel provided and the employee pays for the fuel, it is possible to reclaim the mileage. With a company car/van, the amount you can claim is based on AFR (Advisory Fuel Rates) and varies depending on the fuel type and engine size (cc) of the car. The intention is that these rates only cover the cost of the fuel, and the rates are updated quarterly by HMRC to try and keep them ‘in sync’ with fuel prices.
Learn more about the nuances of mileage and fuel scale charges at our online event “In the driver’s seat: Understanding the tax rules for Vehicles seminar“, taking place on Thursday 25 January between 10am-1pm